Question: 5. (Permit trading): A city is considering introducing a tradable permits program to control local NOX emissions. There are just two types of rm in


5. (Permit trading): A city is considering introducing a tradable permits program to control local NOX emissions. There are just two types of rm in the city high (Type II) and low (Type I) cost abaters. There are, however, different numbers of each type of rm. For the sake of simplicity, assume that there are t Type 11 rms while there is just E Type I rm. A marginal cost of abatement curve for a representative rm of each type is drawn on the diagram on the following page. Suppose the city freely allocates 6'3 and eff permits, respectively, to each rm of each type
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